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Nov. 21, 2002: Housing Starts Down, Permits Up In October

November 21, 2002
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WASHINGTON, DC — Following historically strong housing production in September, builders slowed the rate at which they began new homes and apartments by 11.4% to a seasonally adjusted annual rate of 1.6 million units in October, according to U.S. Department of Commerce figures. However, the rate at which new permits were issued continued to move upward, indicating stronger housing production in the coming months.

"It would be a big mistake to equate [this] report with some kind of 'bubble' effect," said Gary Garczynski, president of the National Association of Home Builders (NAHB). "Builders simply took a breather after a feverish pace of activity in September. While the drop-off was more than expected, single-family housing production remained above the third quarter's robust 1.34 million unit pace. Moreover, Commerce's report on housing permits sets the stage for increased production in the months ahead."

Single-family starts declined 7% in October to a 1.35 million unit pace, while multifamily starts dropped by more than 29% to a 253,000 unit rate. Regionally, only the West posted a gain in housing starts, with a 3.6% increase. The Northeast, Midwest, and South registered declines of 18.8%, 19.5%, and 14.3%, respectively.

Newly issued housing permits were up 1.7% to a 1.76 million unit rate in October, on a 2% gain in the single-family sector and 1% rise on the multifamily side. Permits rose in the Midwest, South, and West by 1%, 3.5%, and 3.9%, respectively, with only the Northeast posting a decline, of 9.6%.

"All things considered, the housing market is still in very good shape, and we stand firm in our projection for a healthy 1.68 million housing starts in 2002 — which would be the highest number since the 1.80 million units started in 1986," said NAHB chief economist David Seiders.

Publication date: 11/18/2002

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